Portfolio Adviser - Portfolio Adviser May 2025
Wealth manager Q&A
2025-05-15 23:11:58
‘Client-first’ mantra
Consumer interests must be at the heart of all we do, says Yariv Haim, CEO and founder of Sparrows Capital, which means providing jargon-free communication and driving value to clients first and company second
Q: What’s the biggest change you’ve seen in the industry since you joined?
Over the past decade, investment trends have shown a significant shift from active to passive strategies. Since 2014, passive funds have experienced positive net inflows each year, while active funds have seen a decline, culminating in net outflows in 2023. The industry needs to face the evidence that underpins this trend and ask itself how it should evolve in light of said evidence.
Q: What is the investment topic most often brought up by clients/investors? Clients are often asking if a simple market-cap-weighted passive strategy can outperform more sophisticated factor-based or ESG passive implementations over the long run.
If a client’s goal is simplicity, low costs and long-term market exposure, a traditional market-cap-weighted passive strategy is likely the best bet. However, if they are willing to accept higher volatility and tracking error in exchange for potential excess returns, factor-based investing may be worth considering.
If clients prioritise sustainability and ethical considerations over pure performance, an ESG passive approach can align with your values, but it may come at a cost in terms of returns.
‘The industry is still full of jargon and overcomplicated descriptions of otherwise very simple ideas’
Q: What piece of regulation has the biggest impact on your day-to-day role?
This currently has to be the Financial Conduct Authority’s Consumer Duty, which is raising the bar for financial firms, ensuring they act in their customers’ best interests. While it increases regulatory pressure, Consumer Duty also builds trust, customer loyalty and long-term business sustainability for firms that get it right.
Senior Managers and Certification Regime (SMCR) is also worth a notable mention, as it shifted towards personal accountability for senior executives, who can no longer hide behind the organisation. They are personally responsible for regulatory compliance and decision-making, and if something goes wrong, regulators can hold them directly liable.
Q: What single change would you make to the wealth management industry?
It should continue to strive for lowering costs and improving transparency. Many firms in the industry should look towards a lower-cost structure. They should reduce assets under management-based fees and offer flat-fees or move to a subscription model. This would help to eliminate hidden fees – and ensure investors fully understand expense ratios, transaction costs and advisory fees.
One of the ways that firms can lower costs would be to prioritise exchange-traded funds and index funds over expensive active alternatives unless there is a justified reason to do so.
Q: What advice would you give to somebody starting out in the industry?
New entrants should take on the mantra to always strive to strengthen trust and fiduciary standards. Industry players should always act in their clients’ best interests, which means driving value to your consumers first and your company second.
The industry is still full of jargon and overcomplicated descriptions of otherwise very simple ideas. New entrants in the wealth industry should always look to develop excellent communication with clients – which means providing clear, jargon-free explanations of strategies and risks.
Lastly, new entrants should believe in educating clients and investors with clear information on market cycles, risk tolerance and evidence-backed long-term investing principles.
Yariv Haim has over 20 years of experience within the investment sector and his expertise spans across investment philosophy, risk management and asset allocation. Prior to establishing Sparrows Capital, he founded two Israeli firms.
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